The new products don’t do much more than anything else on the market, and they’re quite expensive, but there is at least one very important part of the story: Nest is doing it. Nest will sell millions and millions of the new devices. Alphabet sibling Google will be all too happy to tag along.

In the process, Nest will 1) give consumers another reason to adopt Google Assistant for voice control, and 2) give product developers a reason to implement Thread and Weave, two IoT protocols deployed in every Nest product since the first learning thermostat in 2011.

The end game, I believe, is to push the products through insurance agencies (insurtech, as the movement is known), which want more information about their policy holders and proof that the systems they’re subsidizing are actually connected and working.

Maybe the insurtech angle is a stretch — Nest has said nothing about it — but it’s far more interesting than the notion that Nest created a DIY security system that is more expensive and less useful than current offerings.

But first … what does this all mean for Thread and Weave?

Could Nest Sway IoT Standards with Thread & Weave?

Since day one, Nest has incorporated two home-grown IoT technologies, Thread and Weave, into all of its products (Thread evolved when it was handed over to a consortium in 2014, but all Nest products are still Thread-compatible). The thermostats have it. The cameras have it. Nest Protect smoke detectors have it. And all the new products have it, down to the lowly door sensor. Nest would like everything in the house to have it, regardless of who makes it.

Thread is a generic network layer developed for low-bandwidth IoT devices. The technology incorporates the IPv6-based 6LoWPAN standard (using 802.15.4 radios, like what ZigBee uses), but adds mesh technology and provisions for network security and battery optimization for lightweight devices.

On its own, Thread doesn’t do much but enable communications between IoT devices. It’s up to everyone else to add applications on top of it.

Nest’s own application layer is Weave – sort of the equivalent of ZigBee, Z-Wave and OCF, all of which define smart devices (lights, thermostats, etc.), establishing what they do and how they interact with each other.

The technology enables these products to intercommunicate locally, without an Internet connection.

In the case of Nest, a smoke detector could tell the Nest thermostat to shut off the fan when smoke is detected, even if the home network is down.

Bless their little hearts. Yale embraced Nest, Thread and Weave in 2015 and has continued to promote the Linus lock since then, if somewhat apologetically. The product will ship in 2018.

In 2014, Nest opened its Thread technology to the IoT community via the Thread Group, which has been helmed by Nest employees so far.

In 2015, Nest kind of opened up Weave, announcing Yale (ASSA ABLOY) as the first taker. Yale’s new Linus lock would be able to communicate directly with any Nest product, for example, to unlock the door in the event of a smoke alarm.

Two years later, as Nest breathes new life into Weave, no other adopters have been announced

A source tells me the “open” Weave protocol is a “controlled open,” only available to friends o’ Nest, and not fully exposed. As with its “Works with Nest” APIs, only “some of the core components” of Weave are available to third parties. Nest’s “OpenWeave” for third parties is not exactly Weave Weave.

The source says, “I still believe it to be a ‘Nest does it best’ type of open, where all third-party devices are inherently crippled.”

In any case, the power of Nest was not lost on Yale during the press conference, where the Linus lock enjoyed a huge plug, as well as a compelling new use case: The lock will communicate natively with Nest’s new IP-enabled Hello video doorbell … no cloud required.

A guest presses the doorbell. A homeowner answers from afar, recognizes the person, and presses a virtual button to unlock the door. The message can be delivered straight from the doorbell to the lock. In this way, the lock need not carry the burden of a battery-sapping WiFi connection. (August doorbells and locks work similarly, using Bluetooth.)

Better yet, the new Nest doorbell features facial recognition, so presumably the door could unlock automatically if the camera recognizes a familiar face.

There’s more. The Nest Cam IQ outdoor camera features facial recognition (for close up) and person recognition (far away). Because the camera, like all Nest products, has Thread and Weave inside, presumably it could unlock the door automatically when a familiar face is recognized.

For $349, consumers will demand something really special in an IP camera. This camera delivers.It even zooms in on trespassers and tracks them in high-def.

Packing three microphones, the IQ outdoor camera incorporates Google Assistant for voice control. Out on your deck at night? Just say, “OK Google, turn on the lights.”

With its Voice ID feature, the Google Assistant could automatically unlock the door with a spoken command from a recognized voice.

By the way, Nest is is providing a free Google Assistant update for its existing indoor IQ cameras. That makes us believe the service will be embedded in the new security system at some point.

So we see that a worthwhile ecosystem based on Thread and Weave — not to mention Google Assistant — is becoming enticing for smart-home developers.

Nest Secure, UL-Listed Security and Home Automation System

So far, the only Thread and Weave products we’ve seen are robust devices that can support a complete IP stack and Wi-Fi radio anyway, so they don’t actually need Thread/Weave.

The intent of Thread and Weave is to support smaller devices that cannot afford a big battery or Wi-Fi overhead – like a security sensor.

Finally, we have those sensors, called Nest Detect, a component of the new Nest Secure security and home automation system.

Nest Secure starts with Nest Guard, a pretty white hub with an onboard keypad, back-up battery, loud siren, blinking lights and a WiFi radio (cellular optional) for connecting to the outside world – both for remote access and for cloud-to-cloud integration. In Sept. 20 announcement, Nest highlighted integration with Philips Hue, Lifx, Lutron, Chamberlain, “and more.”

In the case of the new Nest Detect, a single CR123 battery powers the sensor for two years or so — respectable, but a little less than the equivalent Z-Wave sensor, and a lot less than traditional alarm sensors (319 – 443 Mhz), which can last more than five years.

A Nest Secure starter kit, including one Guard hub, two Detect sensors and two Tag fobs (NFC only) will retail for about $500, which puts the system at the very high end of the DIY market. (The fob doesn’t do much today. You can use it to disarm the system. old-school like.)

Additional sensors cost $59, which is expensive for any ol’ wireless sensor, but not for a company that sells thermostats for $250 and a basic IP camera for $199.

We could imagine a house full of Nest sensors, potentially multiplying the number of Thread/Weave nodes in a single property by … a lot … overnight. Homes with a security system tend to have about six sensors on average.

Add that to a handful of other Nest nodes like a thermostat and camera, and the Thread/Weave penetration becomes meaningful enough to entice IoT fence-straddlers.

Nest has one more carrot for dawdlers: Nest Connect. The plug-in module serves as a Thread/Weave repeater and WiFi bridge, ensuring reliable coverage across large homes, and providing Internet connectivity for Thread/Weave devices — like the Yale lock and Nest Detect sensors — that don’t have WiFi built in. The device wasn’t discussed in the press conference because only like 12 people on the planet care about it right now. I’m one of them.

With a security system, a plethora of sensors, and a Thread/Weave bridge, Nest is starting to make its two big IoT protocols look pretty interesting to third-party developers.

“There are three important points here,” says Nest engineer Grant Erickson, president of the Thread Group. “First: Is Nest Secure, using Thread + Weave, a UL-1023 certified physical security product? It absolutely is. Second: Can Thread be an ingredient component to a UL 1023-certified product solution? Yes. Finally: Can other companies use Thread + an application layer such as Weave as a low-power, small footprint solution for secure, reliable connectivity to a network with no single point of failure, as Nest has? Absolutely.”

There’s another very important element of Nest Secure. It is (or will be) UL listed for security. Nest didn’t specify – and I haven’t been able to get definitive answers – but I assume they mean UL 1023 compliance for intrusion detection.

UL 1023 has certain requirements for battery back-up, encrypted communications, device supervision and more. Consumers don’t much care about the stamp, but professional security dealers do. Most will not install and monitor non-compliant systems.

For Nest to go the extra mile for a UL 1023 listing – it is neither cheap nor easy to attain, especially for a brand new player with a brand new technology – may suggest the company has designs on the pro channel.

Nest is using MONI Smart Security (formerly Monitronics) as its central station for consumers who want professional security monitoring. MONI, a subsidiary of Ascent Capital Group (Nasdaq:ASCMA), is pretty big, currently monitoring more than 1 million accounts, through a network of authorized security dealers (as well as LiveWatch, the DIY division acquired in 2015).

It’s not inconceivable that MONI would team with Nest to offer dealers the opportunity to sell Nest Secure as a user-installed, professionally monitored solution … or even as a pro-installed system. A pro could build out the whole Google and Nest ecosystem, with cameras, video doorbells, Yale smart locks, and smoke detectors to go with the alarm system. With big incentives from Nest … why not?

If not MONI dealers, then possibly home-technology integrators who crave recurring revenue but don’t install security (yet). Considering these dealers already install doorbells, thermostats, locks and cameras, adding a security hub and monitoring service would be a simple and profitable endeavor.

Or … Nest’s desire to attain UL approval could be as simple as: They were hoping to sell the platform through an ISP like Comcast or security giant like ADT, both of which would require the designation.

The Big Insurance Play?

But there’s another big possibility: Nest is going after the insurance companies.

Given all the wacky start-ups and new products in the security space, insurance providers are taking more care in doling out discounts for monitored systems.

A UL listing is a big fat stamp of approval.

More than that, however, insurance companies are starting to demand proof that systems they subsidize are in fact working and connected. The old days of slashing 10% off the bill for a “monitored security system,” and then never questioning its existence or functionality thereafter … those days are numbered.

Already Nest has convinced insurance companies to give policy holders a Nest Protect smoke detector free of charge … and a 5% discount on top of it. The stipulation is that the insurance company gets notified once a month that 1) batteries are charged, 2) sensors are working, and 3) WiFi is good.

Nest, with Google, is an information company. They can do that.

Insurance companies want more than anything to have a black box in the home like they have in the car today. Drivers can opt in for a discount, while insurance companies gather data, promising not to penalize drivers for whatever they see. Reward drivers, sure, but not penalize.

Nest Detect vs. Other Sensors

$59 may seem cheap for a wireless Nest Detect security sensor compared to the rest of the Nest ecosystem, but it’s pretty expensive by security-sensor standards.

Traditional narrowband wireless alarm sensors (319 – 443 Mhz) start at about $20 retail. They come in the tiniest of sizes and can last up to five or six years on a single battery.

Equivalent Z-Wave sensors start at about $25 dollars and would probably last longer than Nest Detect’s two years.

At the end of the day, the actuaries want better data to help them assess risk beyond the age and sex of the driver. How many stop signs are on the way to work? How many left turns are there? How late does the driver work? Does he stay home on weekends? Are there a lot of trips to the airport?

For the home: How many people go in and out? (Nest cameras can count.) Does the customer arm their security system? How long do the residents sit on the couch? How often does the door open and close? Does the homeowner pace back and forth? Is the home vacant during the summer? The weekends?

This type of data in aggregate can save insurance companies millions or billions of dollars. Brand new policies could be invented.

Now, couple that with data from the black box in the car? Jackpot!

Now, let’s go back to that $500 retail price for a basic Nest security package. It’s really expensive for what it is, especially given that it only works with one variety of relatively expensive security sensor (see sidebar, left). No one else is making Thread/Weave devices except for Yale.

Unlike, say, a Z-Wave system or one that uses standard alarm sensors (319 – 443 Mhz), Nest Secure doesn’t work (locally) with flood detectors, freeze detectors, water shut-off valves, sirens, keyfobs or just plain ol … cheaper door/window sensors. Not to mention, it doesn’t talk to standards-based lights, appliance modules and other niceties that complement virtually every other security system on the market.

In fact, while Nest Secure presumably communicates natively with Nest Protect smoke detectors via Thread/Weave, the smoke detector played no role in the big press conference and is oddly absent in Nest Secure messaging. Why wouldn’t a smoke detector be front-and-center of a securty-system launch? It’s just weird.

We know one thing for sure: the smoke detector is not being monitored by the central station. If the house goes up in flames, no one will be notified except homeowners and the friends on their contact list. Perhaps Nest is whithholding any fire-safety messaging until a UL listing (985) arrives for that?

Between the relatively high retail pricing and scarcity of Thread/Weave integration partners, I see little reason for consumers to buy Nest Secure at retail at this time. The early-adopting Google and Nest groupies, of course, will take the bait.

But I see plenty of reasons for insurance companies to embrace the platform, given the secure nature of the ecosystem, and the generous discounts Nest is likely to provide. In such case, the $500 MSRP on Nest Secure makes a cut-rate deal from an insurance company look pretty darn sweet: We’ll give you this super-cool system for half off, and provide a 10% discount on your homeowner’s insurance if you let us take a look from time to time. Heck yeah.

The major obstacle right now is that Nest Secure doesn’t communicate locally with any leak detectors, which is like the No. 1 thing that insurers want. That omission would be a deal breaker for insurers today, but certainly we’ll see a Nest water sensor soon. I’m guessing 30 days.

The icing on the cake would be if Nest Protect secured (get it?) a UL 985 listing for fire warning systems. If that were the case, it would only be certified if paired with the Nest Secure hub, which could seal Nest’s fate as the provider of choice for insurance companies. It would also make the system — finally — attractive to security pros.

Insurance companies are looking for a hardware, software and data partner. Nobody else is really in the running. Sure, I’ll wager my 25-year smart-home career on the idea that Nest’s security play is an insurance play.

I confess, although I would have gotten there eventually, the insurance bug was planted by an industry associate with whom I texted furiously and furtively during Rosh Hashanah celebrations.

There is so much more to explore — not the least of which is the extensive patent portfolio of Alarm.com and Icontrol (Comcast/Xfinity) — but the rest will have to wait.

About the Author

Julie Jacobson, recipient of the 2014 CEA TechHome Leadership Award, is co-founder of EH Publishing, producer of CE Pro, Electronic House, Commercial Integrator, Security Sales and other leading technology publications. She currently spends most of her time writing for CE Pro in the areas of home automation, security, networked A/V and the business of home systems integration.

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